2006 Utah Code - 61-1-13 — Definitions.
(1) As used in this chapter:
(a) "Affiliate" means a person that, directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with a person specified.
(b) (i) "Agent" means any individual other than a broker-dealer who represents a broker-dealer or issuer in effecting or attempting to effect purchases or sales of securities.
(ii) "Agent" does not include an individual who represents:
(A) an issuer, who receives no commission or other remuneration, directly or indirectly, for effecting or attempting to effect purchases or sales of securities in this state, and who effects transactions:
(I) in securities exempted by Subsection 61-1-14(1)(a), (b), (c), (i), or (j);
(II) exempted by Subsection 61-1-14(2);
(III) in a covered security as described in Sections 18(b)(3) and 18(b)(4)(D) of the Securities Act of 1933; or
(IV) with existing employees, partners, officers, or directors of the issuer; or
(B) a broker-dealer in effecting transactions in this state limited to those transactions described in Section 15(h)(2) of the Securities Exchange Act of 1934.
(iii) A partner, officer, or director of a broker-dealer or issuer, or a person occupying a similar status or performing similar functions, is an agent only if the partner, officer, director, or person otherwise comes within the definition of "agent."
(iv) "Agent" does not include a person described in Subsection (3).
(c) (i) "Broker-dealer" means any person engaged in the business of effecting transactions in securities for the account of others or for the person's own account.
(ii) "Broker-dealer" does not include:
(A) an agent;
(B) an issuer;
(C) a bank, savings institution, or trust company;
(D) a person who has no place of business in this state if:
(I) the person effects transactions in this state exclusively with or through:
(Aa) the issuers of the securities involved in the transactions;
(Bb) other broker-dealers; or
(Cc) banks, savings institutions, trust companies, insurance companies, investment companies as defined in the Investment Company Act of 1940, pension or profit-sharing trusts, or other financial institutions or institutional buyers, whether acting for themselves or as trustees; or
(II) during any period of 12 consecutive months the person does not direct more than 15 offers to sell or buy into this state in any manner to persons other than those specified in Subsection (1)(c)(ii)(D)(I), whether or not the offeror or any of the offerees is then present in this state;
(E) a general partner who organizes and effects transactions in securities of three or fewer limited partnerships, of which the person is the general partner, in any period of 12 consecutive months;
(F) a person whose participation in transactions in securities is confined to those transactions made by or through a broker-dealer licensed in this state;
(G) a person who is a real estate broker licensed in this state and who effects transactions
in a bond or other evidence of indebtedness secured by a real or chattel mortgage or deed of trust,
or by an agreement for the sale of real estate or chattels, if the entire mortgage, deed or trust, or
agreement, together with all the bonds or other evidences of indebtedness secured thereby, is
offered and sold as a unit;
(H) a person effecting transactions in commodity contracts or commodity options;
(I) a person described in Subsection (3); or
(J) other persons as the division, by rule or order, may designate, consistent with the
public interest and protection of investors, as not within the intent of this Subsection (1)(c).
(d) "Buy" or "purchase" means every contract for purchase of, contract to buy, or
acquisition of a security or interest in a security for value.
(e) "Commodity" means, except as otherwise specified by the division by rule:
(i) any agricultural, grain, or livestock product or byproduct, except real property or any
timber, agricultural, or livestock product grown or raised on real property and offered or sold by
the owner or lessee of the real property;
(ii) any metal or mineral, including a precious metal, except a numismatic coin whose
fair market value is at least 15% greater than the value of the metal it contains;
(iii) any gem or gemstone, whether characterized as precious, semi-precious, or
otherwise;
(iv) any fuel, whether liquid, gaseous, or otherwise;
(v) any foreign currency; and
(vi) all other goods, articles, products, or items of any kind, except any work of art
offered or sold by art dealers, at public auction or offered or sold through a private sale by the
owner of the work.
(f) (i) "Commodity contract" means any account, agreement, or contract for the purchase
or sale, primarily for speculation or investment purposes and not for use or consumption by the
offeree or purchaser, of one or more commodities, whether for immediate or subsequent delivery
or whether delivery is intended by the parties, and whether characterized as a cash contract,
deferred shipment or deferred delivery contract, forward contract, futures contract, installment or
margin contract, leverage contract, or otherwise.
(ii) Any commodity contract offered or sold shall, in the absence of evidence to the
contrary, be presumed to be offered or sold for speculation or investment purposes.
(iii) (A) A commodity contract shall not include any contract or agreement which
requires, and under which the purchaser receives, within 28 calendar days from the payment in
good funds any portion of the purchase price, physical delivery of the total amount of each
commodity to be purchased under the contract or agreement.
(B) The purchaser is not considered to have received physical delivery of the total
amount of each commodity to be purchased under the contract or agreement when the
commodity or commodities are held as collateral for a loan or are subject to a lien of any person
when the loan or lien arises in connection with the purchase of each commodity or commodities.
(g) (i) "Commodity option" means any account, agreement, or contract giving a party to
the option the right but not the obligation to purchase or sell one or more commodities or one or
more commodity contracts, or both whether characterized as an option, privilege, indemnity, bid,
offer, put, call, advance guaranty, decline guaranty, or otherwise.
(ii) "Commodity option" does not include an option traded on a national securities
exchange registered:
(A) with the United States Securities and Exchange Commission; or
(B) on a board of trade designated as a contract market by the Commodity Futures Trading Commission.
(h) "Director" means the director of the Division of Securities charged with the administration and enforcement of this chapter.
(i) "Division" means the Division of Securities established by Section 61-1-18.
(j) "Executive director" means the executive director of the Department of Commerce.
(k) "Federal covered adviser" means a person who:
(i) is registered under Section 203 of the Investment Advisers Act of 1940; or
(ii) is excluded from the definition of "investment adviser" under Section 202(a)(11) of the Investment Advisers Act of 1940.
(l) "Federal covered security" means any security that is a covered security under Section 18(b) of the Securities Act of 1933 or rules or regulations promulgated under Section 18(b) of the Securities Act of 1933.
(m) "Fraud," "deceit," and "defraud" are not limited to their common-law meanings.
(n) "Guaranteed" means guaranteed as to payment of principal or interest as to debt securities, or dividends as to equity securities.
(o) (i) "Investment adviser" means any person who:
(A) for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing, or selling securities; or
(B) for compensation and as a part of a regular business, issues or promulgates analyses or reports concerning securities.
(ii) "Investment adviser" includes financial planners and other persons who:
(A) as an integral component of other financially related services, provide the investment advisory services described in Subsection (1)(o)(i) to others for compensation and as part of a business; or
(B) hold themselves out as providing the investment advisory services described in Subsection (1)(o)(i) to others for compensation.
(iii) "Investment adviser" does not include:
(A) an investment adviser representative;
(B) a bank, savings institution, or trust company;
(C) a lawyer, accountant, engineer, or teacher whose performance of these services is solely incidental to the practice of his profession;
(D) a broker-dealer or its agent whose performance of these services is solely incidental to the conduct of its business as a broker-dealer and who receives no special compensation for the services;
(E) a publisher of any bona fide newspaper, news column, news letter, news magazine, or business or financial publication or service, of general, regular, and paid circulation, whether communicated in hard copy form, or by electronic means, or otherwise, that does not consist of the rendering of advice on the basis of the specific investment situation of each client;
(F) any person who is a federal covered adviser;
(G) a person described in Subsection (3); or
(H) such other persons not within the intent of this Subsection (1)(o) as the division may by rule or order designate.
(p) (i) "Investment adviser representative" means any partner, officer, director of, or a person occupying a similar status or performing similar functions, or other individual, except clerical or ministerial personnel, who:
(A) (I) is employed by or associated with an investment adviser who is licensed or required to be licensed under this chapter; or
(II) has a place of business located in this state and is employed by or associated with a federal covered adviser; and
(B) does any of the following:
(I) makes any recommendations or otherwise renders advice regarding securities;
(II) manages accounts or portfolios of clients;
(III) determines which recommendation or advice regarding securities should be given;
(IV) solicits, offers, or negotiates for the sale of or sells investment advisory services; or
(V) supervises employees who perform any of the acts described in this Subsection (1)(p)(i)(B).
(ii) "Investment advisor representative" does not include a person described in Subsection (3).
(q) (i) "Issuer" means any person who issues or proposes to issue any security or has outstanding a security that it has issued.
(ii) With respect to a preorganization certificate or subscription, "issuer" means the promoter or the promoters of the person to be organized.
(iii) "Issuer" means the person or persons performing the acts and assuming duties of a depositor or manager under the provisions of the trust or other agreement or instrument under which the security is issued with respect to:
(A) interests in trusts, including collateral trust certificates, voting trust certificates, and certificates of deposit for securities; or
(B) shares in an investment company without a board of directors.
(iv) With respect to an equipment trust certificate, a conditional sales contract, or similar securities serving the same purpose, "issuer" means the person by whom the equipment or property is to be used.
(v) With respect to interests in partnerships, general or limited, "issuer" means the partnership itself and not the general partner or partners.
(vi) With respect to certificates of interest or participation in oil, gas, or mining titles or leases or in payment out of production under the titles or leases, "issuer" means the owner of the title or lease or right of production, whether whole or fractional, who creates fractional interests therein for the purpose of sale.
(r) "Nonissuer" means not directly or indirectly for the benefit of the issuer.
(s) "Person" means:
(i) an individual;
(ii) a corporation;
(iii) a partnership;
(iv) a limited liability company;
(v) an association;
(vi) a joint-stock company;
(vii) a joint venture;
(viii) a trust where the interests of the beneficiaries are evidenced by a security;
(ix) an unincorporated organization;
(x) a government; or
(xi) a political subdivision of a government.
(t) "Precious metal" means the following, whether in coin, bullion, or other form:
(i) silver;
(ii) gold;
(iii) platinum;
(iv) palladium;
(v) copper; and
(vi) such other substances as the division may specify by rule.
(u) "Promoter" means any person who, acting alone or in concert with one or more persons, takes initiative in founding or organizing the business or enterprise of a person.
(v) (i) "Sale" or "sell" includes every contract for sale of, contract to sell, or disposition of, a security or interest in a security for value.
(ii) "Offer" or "offer to sell" includes every attempt or offer to dispose of, or solicitation of an offer to buy, a security or interest in a security for value.
(iii) The following are examples of the definitions in Subsection (1)(v)(i) or (ii):
(A) any security given or delivered with or as a bonus on account of any purchase of a security or any other thing, is part of the subject of the purchase, and has been offered and sold for value;
(B) a purported gift of assessable stock is an offer or sale as is each assessment levied on the stock;
(C) an offer or sale of a security that is convertible into, or entitles its holder to acquire or subscribe to another security of the same or another issuer is an offer or sale of that security, and also an offer of the other security, whether the right to convert or acquire is exercisable immediately or in the future;
(D) any conversion or exchange of one security for another shall constitute an offer or sale of the security received in a conversion or exchange, and the offer to buy or the purchase of the security converted or exchanged;
(E) securities distributed as a dividend wherein the person receiving the dividend surrenders the right, or the alternative right, to receive a cash or property dividend is an offer or sale;
(F) a dividend of a security of another issuer is an offer or sale; or
(G) the issuance of a security under a merger, consolidation, reorganization, recapitalization, reclassification, or acquisition of assets shall constitute the offer or sale of the security issued as well as the offer to buy or the purchase of any security surrendered in connection therewith, unless the sole purpose of the transaction is to change the issuer's domicile.
(iv) The terms defined in Subsections (1)(v)(i) and (ii) do not include:
(A) a good faith gift;
(B) a transfer by death;
(C) a transfer by termination of a trust or of a beneficial interest in a trust;
(D) a security dividend not within Subsection (1)(v)(iii)(E) or (F);
(E) a securities split or reverse split; or
(F) any act incident to a judicially approved reorganization in which a security is issued in exchange for one or more outstanding securities, claims, or property interests, or partly in such
exchange and partly for cash.
(w) "Securities Act of 1933," "Securities Exchange Act of 1934," "Public Utility Holding
Company Act of 1935," and "Investment Company Act of 1940" mean the federal statutes of
those names as amended before or after the effective date of this chapter.
(x) (i) "Security" means any:
(A) note;
(B) stock;
(C) treasury stock;
(D) bond;
(E) debenture;
(F) evidence of indebtedness;
(G) certificate of interest or participation in any profit-sharing agreement;
(H) collateral-trust certificate;
(I) preorganization certificate or subscription;
(J) transferable share;
(K) investment contract;
(L) burial certificate or burial contract;
(M) voting-trust certificate;
(N) certificate of deposit for a security;
(O) certificate of interest or participation in an oil, gas, or mining title or lease or in
payments out of production under such a title or lease;
(P) commodity contract or commodity option;
(Q) interest in a limited liability company;
(R) viatical settlement interest; or
(S) in general, any interest or instrument commonly known as a "security," or any
certificate of interest or participation in, temporary or interim certificate for, receipt for,
guarantee of, or warrant or right to subscribe to or purchase any of the foregoing.
(ii) "Security" does not include any:
(A) insurance or endowment policy or annuity contract under which an insurance
company promises to pay money in a lump sum or periodically for life or some other specified
period;
(B) interest in a limited liability company in which the limited liability company is
formed as part of an estate plan where all of the members are related by blood or marriage, there
are five or fewer members, or the person claiming this exception can prove that all of the
members are actively engaged in the management of the limited liability company; or
(C) (I) a whole long-term estate in real property;
(II) an undivided fractionalized long-term estate in real property that consists of ten or
fewer owners; or
(III) an undivided fractionalized long-term estate in real property that consists of more
than ten owners if, when the real property estate is subject to a management agreement:
(Aa) the management agreement permits a simple majority of owners of the real property
estate to not renew or to terminate the management agreement at the earlier of the end of the
management agreement's current term, or 180 days after the day on which the owners give notice
of termination to the manager;
(Bb) the management agreement prohibits, directly or indirectly, the lending of the
proceeds earned from the real property estate or the use or pledge of its assets to any person or
entity affiliated with or under common control of the manager; and
(Cc) the management agreement complies with any other requirement imposed by rule
by the Real Estate Commission under Section 61-2-26.
(iii) For purposes of Subsection (1)(x)(ii)(B), evidence that members vote or have the
right to vote, or the right to information concerning the business and affairs of the limited
liability company, or the right to participate in management, shall not establish, without more,
that all members are actively engaged in the management of the limited liability company.
(y) "State" means any state, territory, or possession of the United States, the District of
Columbia, and Puerto Rico.
(z) "Threshold security" means a security that is a threshold security under Regulation
SHO, 17 C.F.R. 242.200 et seq.
(aa) (i) "Undivided fractionalized long-term estate" means an ownership interest in real
property by two or more persons that is a:
(A) tenancy in common; or
(B) any other legal form of undivided estate in real property including:
(I) a fee estate;
(II) a life estate; or
(III) other long-term estate.
(ii) "Undivided fractionalized long-term estate" does not include a joint tenancy.
(bb) (i) "Viatical settlement interest" means the entire interest or any fractional interest in
any of the following that is the subject of a viatical settlement:
(A) a life insurance policy; or
(B) the death benefit under a life insurance policy.
(ii) "Viatical settlement interest" does not include the initial purchase from the viator by
a provider of viatical settlements.
(cc) "Whole long-term estate" means a person or persons through joint tenancy owns real
property through:
(i) a fee estate;
(ii) a life estate; or
(iii) other long-term estate.
(dd) "Working days" means 8 a.m. to 5 p.m., Monday through Friday, exclusive of legal
holidays listed in Section 63-13-2.
(2) A term not defined in this section shall have the meaning as established by division
rule. The meaning of a term neither defined in this section nor by rule of the division shall be the
meaning commonly accepted in the business community.
(3) (a) This Subsection (3) applies to:
(i) the offer or sale of a real property estate exempted from the definition of security
under Subsection (1)(x)(ii)(C); or
(ii) the offer or sale of an undivided fractionalized long-term estate that is the offer of a
security.
(b) A person who, directly or indirectly receives compensation in connection with the
offer or sale as provided in this Subsection (3) of a real property estate is not an agent,
broker-dealer, investment adviser, or investor adviser representative under this chapter if that
person is licensed under Chapter 2, Division of Real Estate, as:
(i) a principal real estate broker;
(ii) an associate real estate broker; or
(iii) a real estate sales agent.
(4) The list of real property estates excluded from the definition of securities under Subsection (1)(x)(ii)(C) is not an exclusive list of real property estates or interests that are not a security.
Amended by Chapter 4, 2006 Special Session 3
